Future of health care reform legislation remains uncertain
Democratic health care reform efforts have still not fully recovered from the victory of Republican Scott Brown in a special Senate election in Massachusetts. The outcome gave Republicans the 41 Senate votes needed to block a Democratic health care bill and has forced Democrats to revise their strategy. Health care reform legislation remains in serious jeopardy.
There are no easy options for Democrats. The Senate and House have each passed comprehensive bills, but likely do not have the votes to push a compromise version through the Senate. Many Senate Democrats, as well as some House members, have interpreted Brown’s victory in Massachusetts as a signal that voters are not happy and want a more modest approach to health care. The president has urged Democrats not to give up, but also acknowledged that their approach may need to be reconsidered.
Other issues have since taken center stage while congressional Democratic leaders debate strategies behind the scenes for reviving health care reform. House leaders have discussed passing a series of smaller stand-alone health provisions in an effort to pass incremental reforms. The House could also pass the Senate version along with a separate “corrections” bill that includes compromises worked out between House and Senate leaders. This corrections bill could be passed through both chambers using reconciliation procedures that would eliminate the need for the 60 vote Senate supermajority the Democrats no longer have. But this procedure is fraught with procedural and political complications.
Democrats may have to settle for moving a smaller, more targeted bill if they hope to pass any health bill at all. A new bill could be re-crafted as a reconciliation package or with more universally accepted provisions that will attract at least some Republican support. Although congressional focus has shifted to other issues right now, the health care reform debate is likely far from over.
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Senate approval of health bill sets up House-Senate negotiations
The Senate voted 60 to 39 on Dec. 24 to approve a sweeping health care reform package with billions in tax changes. The House and Senate can now begin the difficult negotiations to resolve the differences between their bills.
The opportunities for compromise are narrow. The Senate needed the unanimous support of all 58 Democrats, plus two independents, in order to clear its bill. The House passed its version on Nov. 7 in a close 220-215 vote that also leaves House Democrats with a slim majority.
Both the House and Senate bills contain hundreds of billions in tax changes. Although there are some similarities in the tax titles, Democratic leaders will have to resolve several major tax differences to reach an agreement. The most significant differences lie in how each chamber pays for its bill.
Major Senate tax offsets not in the House bill include:
- a 40 percent excise tax on most health plans worth more than $8,500 for individuals and $23,000 for families;
- a 0.9 percent Medicare tax increase on employee wages in excess of $200,000 for singles and $250,000 for married couples; and
- a 10 percent excise tax on tanning salons.
Major House tax offsets not in the Senate version include:
- a 5.4 percent surtax on adjusted gross income above $500,000 for single filers, trusts and estates, and $1 million for joint filers; and
- several new penalty provisions for transactions lacking economic substance and corporations with over $100 million in gross receipts.
Read Tax Legislative Update 2009-21 for a full comparison of the revenue-related provisions in each version.